Apple Pay Steps Up Promotion in China

by Raymond Pucci 0

Having brand recognition is one thing—getting market penetration is another, especially against entrenched competition. As the following article points out, Apple Pay is looking to make inroads in the Chinese mobile payments market where Alipay and WeChat Pay have a strong presence.

Apple Pay’s first large-scale promotion in China marks Apple Inc’s strategic shift to the mobile payments sector, which can be developed to promote the company’s other business segments, an industry expert said on Thursday. Apple Pay, the mobile payment and digital wallet of Apple Inc, has launched its first large-scale sales promotion in China. It will be effective from July 18-24, offering customers at least a 50 percent discount and up to 50 times the usual number of credit card reward points, according to a notice posted on the website of Apple on Thursday.

Customers can get these benefits by using Apple Pay in stores that display the logo of Union Pay’s quick pass facility for online and off-line transactions, the notice said. “We’ve provided similar offers in other countries like Japan and most recently in the US, which helped to drive sales for merchants and apps that support Apple Pay,” Apple China said in an e-mail sent to Global Times on Thursday.

Digital payment systems offered by other mobile phone brands such as South Korea-based Samsung and the domestic producer Huawei have also failed to attract as many customers as domestic mobile payment tools such as Alipay, China’s e-commerce titan Alibaba Group Holding’s third-party payment tool, and WeChat Pay developed by Tencent Holdings, media reported on Thursday.

“Apple Pay has a higher threshold [for use] than the other two payment methods because it requires specific equipment for both customers and merchants, making it hard to compete in an open environment,” Liu Dingding, a Beijing-based independent analyst, told the Global Times Thursday.

“I prefer to use Apple Pay if the three payment ways coexist when I buy something in a store because by using Apple Pay, you don’t have to open the app on your phone. And in most cases, you can avoid the trouble of swiping the two-dimensional code as required sometimes by Alipay or WeChat Pay,” a Beijing-based white-collar worker surnamed Jia told the Global Times on Thursday. “But sometimes the signal of the [point of sales] terminals might be bad, which can affect my payment experience with Apple Pay. Besides, I don’t often see the logo of Apple Pay.”

You can’t blame Apple for trying as they are trying to cross-sell various services aligned with their iPhone portfolio in China. The results from these initial market promotions will reveal early signals on what piece of the mobile payments pie that Apple Pay can achieve. Given their cash reserves and vaunted winning record, Apple will not give up quickly.

 

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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